Increasing RAM is one of the quickest, most efficient and most cost-effective ways to boost processor performance. Increasing RAM means it has to swap out less memory to the hardrive. As you get more applications/data open on your system, the OS will save out sections of RAM onto your disk and read them back in as necessary. So the more RAM, the less of a possibility of needing to swap out to disk. Obviously a faster larger drive will do this swapping quicker but to avoid swapping is where more RAM comes in. Loading programs will be faster with a faster hard drive but the most noticeable speed up will be when working will be with more RAM.
Woodchip mentions obtaining a 30/40 Gb 7200rpm drive but I doubt if that is possible as 7200rpm laptop drives are fairly recent and I believe only start at 60/80Gb. The amount of data on a hard drive can slow any swapping out from RAM down as it has to find areas in the hard drive that are free. That is where defragging comes in by creating free areas all together.